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Urea prices have dropped – will diammonium prices still rise? Author/Source: China Fertilizer Network Date: 2020-12-01 Clicks: 19 You read that right – urea prices have been falling all week. Currently, the ex-factory price of urea in Shandong Province has dropped to 1760–1780 yuan per ton (the same unit is used throughout). Although India has announced another tender for urea, the delay in holding this tender has led to a situation where market demand has been largely exhausted. Issues such as a decline in industrial demand and a slow release of agricultural demand have become apparent. While some factories still have many orders pending, market prices continue to drop. At a time when the price of urea is declining sharply, diammonium phosphate factories are trying to take advantage of this phosphorus-based fertilizer conference to push up prices that are already high. So, can the price of diammonium phosphate really rise any further? How much can it rise? Firstly, most companies have no inventory, no stock in ports, and a large amount awaiting shipment. Recently, the prices of diammonium compounds have been on the rise. Companies are primarily focusing on fulfilling existing orders, with most factories having stock that will last until the end of December; some companies have even stopped accepting new orders. Factory inventories have remained at historically low levels since the market resumed activity in autumn. The buildup of inventory in ports, which used to occur in order to alleviate supply pressures, hardly exists anymore. Driven by demand, diammonium fertilizer plants have been facing a situation of supply falling short of demand. Low inventory levels and low stock levels at ports, along with orders that are scheduled to be shipped next year, all serve as the basis for diammonium fertilizer factories to continue raising prices. Secondly, domestic and external demand still exists. The winter storage market is currently at a standstill. The reasons for this situation include not only high prices but also the limited amount of inventory available on the market. The low-priced goods that downstream distributors ordered earlier have not all arrived yet; even if payments are made now, no inventory can be obtained, and the associated business risks must still be borne. It is therefore easy to understand why downstream traders have slowed down their purchasing pace. Although some companies in Hubei have recently moved their distribution centers to within China, due to low inventory levels, the amount of diammonium phosphate arriving in China is still less than 30% of the required amount; demand will remain high in the future. The demand for international diammonium phosphate indeed experienced a short-term downturn, but recently some factories have still secured export orders worth 30,000 tons, with the ex-ship price rising to $360–363. Considering the low inventory levels of international buyers such as India and Pakistan, international demand is not likely to remain weak for long. It is precisely due to optimism about future market conditions that diammonium fertilizer manufacturers continue to raise their prices. Finally, raw material costs remain high and stable. The phosphorus compound fertilizer conference is being held in Qingdao. Although the pandemic has dampened the enthusiasm surrounding this event, we still couldn’t avoid the annual sharp increase in prices of raw materials. As downstream products such as monoammonium and diammonium fertilizers see overall price increases, the prices of raw materials rise accordingly. Currently, the price of granular sulfur at the Yangtze River Port is 910 yuan, while that at the Puguang Wanzhou Port is as high as 850 yuan ； Although the price of liquid ammonia has dropped recently, the on-site price in Hubei region remains around 3100 yuan. The high-level consolidation of raw material prices has led to a significant increase in the production costs of diammonium compounds compared to previous periods, which undoubtedly strengthens the companies’ determination to raise prices. In summary, although the diammonium market is currently in a brief stalemate, favorable factors will continue to dominate it for a long time to come. As supply increases in the market and wholesale markets become more active, factory prices for diammonium are likely to keep rising. (Rong Guangwen)